If you sow doubts you are bound to harvest uncertainty

MADRID | The Spanish financial system badly needs to get equipped with a survival kit. Not only has it been left stranded in a highly hostile territory. Its guide and guardian may have developed a rare taste for inflicting damage on it. There can be no other plausible clue to explain the Economy minister’s statement at the outcome of the last Ecofin meeting. He flatly acknowledged there were good reasons to cast open doubts on banking asset values, promising to appoint independent firms to set things straight… in a couple of months. A close to eternity delay in such a highly volatile environment.

The week before observers watched in disbelief how a full fledged crisis hitting a systemic institution like BANKIA was allowed to unfold itself in the mid of a stock exchange trading session. They were further baffled by the 72-hours vacuum until bail out measures were announced. In the vital D-day the only reassuring words were delivered by the opposition leader, government confining its comfort message to a low-key press release.

You might put the blame for such blatant blunders on the pressure a sudden mess exerts on any human being, be him a political leader. But when everything was calm in the financial front, the Economy minister seemed eager to warn investors on the staggering size of undisclosed bad loans Spanish banks concealed in their balance sheets.

How else can you interpret they should be forced in February to cover risks up to a 87% drop in real estate prices? How else can you elucidate they were recently required to enter 30% provisions on sound assets? Raising extensive doubts on banking solvency has inevitably led to a huge confidence gap in the Spanish financial market. Other countries facing similar problems have judiciously waited for better times to tackle them.

Spain has the dubious merit to have opted to trumpet its real and potential frailties. It now faces a calamitous situation it has largely contributed to build on its own will.